raif’s random rants…

sometimes starting a company is like playing house… especially when you’re setting up your office.

both my co-founder tyler and i have always felt strongly that the environment we set up now will play a significant role in shaping the culture and the values of the company we’re building at carsala. we are also both pretty frugal to a fault, so we started off for our interior decoration with a very (VERY) limited budget.

we ended up with some pretty cool looking desks with trestles and somewhat comfortable chairs, each under $100.

next challenge was to find some art for the walls.

my pick for the technology and marketing room was the photograph above by renowned photojournalist w. eugene smith called “dream street”. i felt it was very appropriate for a handful of people who have set out to change the single largest retail segment of the US economy (44M used cars are sold every year, representing $365 billion).

the entrepreneurial spirit is really one with the spirit of the dreamer… the pursuit of  creation of something out of nothing… the pursuit of something better and greater…

“dream street” embodies this entrepreneurial spirit - the spirit we have at carsala.

just yesterday, as I was trying to snap out of my usual 3pm crash down with a double espresso, I was thinking how great afternoon naps are. I even thought how great it could be to constitute a mandatory siesta at carsala… it would be a tough sell in a north american work environment and even a tougher sell with our investors… so i decided to shelf that project for now, or at least at a later time when i could pull it off…

as i’d stopped daydreaming about napping, i came across this in the latest springwise newsletter: barcelona hilton reserves rooms for a siesta. now that’s an innovative idea that should be embraced in north american hotels. especially one that is preferably within walking distance of the carsala offices ;)

living in berkeley, it is not too uncommon to find yourself surrounded by priuses (or is it prii?). i’ll bet anything that the prius per capita quotient in berkeley must be one of the highest in the country.

now, i am happy that a major car manufacturer is behind a car technology that significantly improves mileage compared to most other new cars. however, before we celebrate the prius as the savior invention of the 21st century, we have to put it in some context and take it for what it is.  my main goal with this post is to demonstrate how little even a leap such as the prius actually has accomplished. it’s a tiny step towards the right direction - emphasis on tiny. we have to do a lot more.

firstly, why is the prius so popular? there are countless debates online between the honda prius and it’s closest follower the honda civic hybrid. in terms of mileage, they are pretty much comparable. most comparisons come down to the different features available in the two cars. however, in terms of sales prius is the clear winner. my theory for this is that prius is it’s own car. when you drive a prius, everyone who sees you knows that you drive a hybrid and therefore must be saving the world. however, if you’re driving a civic hybrid, you can’t really tell that it’s a hybrid other than the really small tag in the very back. i think that this need of acknowledgment plays a big part in consumer behavior. major marketing blunder in my opinion on honda’s part. they should have given the civic hybrid a distinctive body shape - and separate model even. in a way, it is the same consumer behavior and needs that make people buy a hummer with $5000 rims.

now let’s examine the gas mileage. according to toyota, the 2008 prius gets 48 mpg in the city and 45 mpg on the highway. impressive yes. record breaking mileage? far from it. The 1984-87 Honda CRX got 41 mpg in the city and 50 mpg on the highway. yes that’s the honda crx from over 20 years ago.

you think 20 years is impressive? how about 30? as Saul Griffith pointed out in his presentation at this years foo camp, the Citroen CV2 did even better…

the 1974 Citroen CV2 got 50.9 mpg - not too shabby.

in addition to the great mileage, the CRX and the CV2 did not have batteries that will have to be disposed of every 8 years  which represent a significant cost to both the owners and the manufacturers.

so, if the prius is not good enough, what do we do? how will you get to work? well a bicycle is probably the best. however, as someone pointed out at foo camp, if you were to bike to work everyday, your lifespan would probably increase by 5-10 years which would dramatically increase your overall carbon footprint on earth… so if you do bike to work everyday, make sure to pick up smoking as your personal carbon offset…

hard to believe that it’s been over 3 months since i’ve posted on my blog.

it’s a shame. but i’ll make an attempt at an excuse:

in the last three months, along with my co-founder Tyler Elliston, we’ve been ridiculously busy founding and raising seed funding for carsala - an innovative service that will revolutionize how people buy cars. we will make the official press release soon but i’m thrilled to report that we have some top notch vc’s in the mix that positions us beautifully for the future of our company. we’ve recruited some brilliant people that are already busy building the product which should go into private beta this fall.

stay tuned for more frequent updates as we build this great company…

I usually don’t like posting a news article without any meaningful commentary, but this one I couldn’t resist…

at one point this past weekend, thanks to some strong winds, wind powered 40% of all electricity in Spain. this is significant to demonstrate what’s possible with alternative energy…

here’s the article:

http://www.metaefficient.com/news/new-record-wind-powers-40-of-spain.html

A few weeks ago, I attended the UC Berkeley Energy Symposium.

It was a very thought provoking and educational day. I have below my detailed notes from the sessions I attended. But before moving on to those I’d like to synthesize some of my key takeaways:

• There is no silver bullet to the climate change/energy crisis problem. It is more of a silver shotgun (owing this analogy to Blake Simmons from JBEI). Another nice analogy is David Sandalow’s cathedral thinking approach (read on the notes for details)
• Corn ethanol is doomed. Alternatives must be explored, conquered.
• China is a significant part of the problem and must be a significant part of the solution.
• Climate Change & the Energy Crisis represents the greatest issue and the greatest opportunity of our lifetimes. As a software developer in the 90’s I’d felt that we were going to change the world with the Internet. And we did. I felt the same vibe from the young minds at BERC.

Here are my detailed notes:

…
Opening Remarks by David Sandalow:

David Sandalow is the author of Freedom from Oil. He is regarded as an insightful expert on how to limit USA’s dependence on (foreign) oil. I must emphasize that his focus seemed to be on reducing the dependence on foreign oil rather than reducing greenhouse emissions. Here are the key highlights from his opening remarks:

Plugging cars into the grid:

• To reduce dependency on oil, we must connect cars & trucks to the electric grid. This is why:
  • Cars & Trucks receive 96% of their energy from oil. 60% of that oil is imported.
  • Only 3% of electricity production comes from oil.
• He argues that coal-powered electricity plants are more efficient than the internal combustion engine, therefore plugging cars into the grid would reduce greenhouse emissions.
• Plug-in Hybrid cars are the next solution for the auto industry. They get 150 miles/gallon today. GM is investing heavily in Chevy Volt which should be on the roads by 2010.
• Biofuels have a role in this as well, however the pendulum has swung on this. There is a lot of skepticism on the economic viability of scaling biofuels.

Mass Transit & Commuting:

• Widening a road to fix traffic congestion is like loosening your belt to lose weight.

Cathedral Thinking on Climate Change:

• Climate change and the energy crisis are bigger problems than what a single generation or nation can fix. We have to approach it as how cathedrals were built where it took multiple generations of people to build one. The stone mason probably lived a 100 years before the stained glass guy. This is the way we have to approach the climate change and the energy crisis as it will take a lot of smaller steps to fix the bigger problem.

China & India:

• China & India will have to be key components of the solution as they are (and will be) a significant part of the problem.
• China adds 50-100 gigawatts of plant capacity every year.
• Beijing alone adds 600 cars/day. And almost none are scrapped. Whereas in the US, for every 10 cars that go on the road, 9 are scrapped and taken off the road.
• Although India is critical, China has to have the main focus. China is 3X less energy efficient as India.

Nuclear Energy:

• The three key issues with Nuclear Energy are: 1) It’s VERY expensive. Needs gov’t subsidies to happen. 2) The obvious non proliferation issues, especially from an int’l perspective. 3) Waste problem is still not solved.
• Despite these lingering and significant issues, it will be a mistake to turn the door on nuclear power.

John Doerr Keynote:

John Doerr was the afternoon keynote speaker. Very engaging speech with some good data points. Just a reminder that Al Gore has joined John Doerr’s firm as a partner.

Why invest in Green:

• Google took $25MM to be profitable
• Alternative Energy firms will take 10x that.
• BUT, the opportunity is 10x as well. Tech opportunities are in the billions whereas energy opportunities are in trillions.
• “There is a time when panic is the appropriate response.” - Eugene Kleiner
• Going Green = Making Green
• Crisis = Opportunity
• Greentech will be bigger and more profitable than the Internet
• “Going Green is the largest economic opportunity of the 21st century.” - John Doerr
• He has invested $300M in 30 companies in this space.

Approach:

John Doerr sees 3 C’s to attack:

1. Coal
2. Car
3. Conversation & Efficiency

For coal, we need to find better alternatives. For cars, we need better cars and better transportation methods.

On Wal-Mart:

• Heating, Lighting & Refrigeration are the 3 top sources of energy usage at Wal-Mart.

On Biofuels:

• John Doerr believes biofuels is the silver bullet. This is in direct contrast to many others in the field. This is understandable as John has invested a lot of money in ethanol. Another person who believes biofuels is the silver bullet is Vinod Khosla - another VC that has invested millions in ethanol :)
• Every other speaker in this symposium has downplayed and lowered expectations on ethanol and biofuels.
• Brazil has replaced 40% of its oil consumption with ethanol. They have 29,000 ethanol pumps across the country, compared with only 700 in the U.S.

On Government Investment:

• US Federal Investment in Renewable Energy: $1B
• DoE investment in Geo-Thermal: $5MM
• NOT ENOUGH!

On China:

• China’s CO2 emissions will be double US’s by 2050.

Call to Action:

1. Put a cap and price on carbon.
2. Extend ITC (Investment Tax Credit) on Renewable Energy for another 10 years.
3. Increase Federal R&D budget.

On Solar-Thermal vs Renewable Energy:

• Solar-Thermal will be quicker to market, BUT, renewable energy will have a bigger impact overall.

General Unsolicited Advice:

• Network (1-person/day everyday for 10 mins)
• Integrity is a binary state
• Find and sustain mentors

Panel: Biofuels & Bioenergy

This was a panel on Biofuels & Bioenergy. You can see who the panelists were on the BERC page. But here are the key highlights that I noted:

Case against Corn Ethanol:

• “All the world is waiting for a substitute for gasoline, the day is not far distant when, for every one of those barrels of gasoline, a barrel of alcohol must be substituted.” - Henry Ford 1916.
• US Consumption of Ethanol in 2007: 7.8BG. Up from 1BG in 2001.
• To replace 12% of oil consumption in the US with corn ethanol, we would need 50% of the corn production in the US.
• Corn has very high fertilizer requirements.
• Corn ethanol reduces greenhouse emissions by only 12-20% compared to gasoline.
• HOWEVER, it drives deforestation in the developing world, therefore possibly offsetting any greenhouse benefits.
• Solution: Alternatives to Corn - Switchgrass, miscanthus, other cellulosic alternatives.

Doug Cameron - Chief Scientific Officer, Khosla Ventures:

Doug downplayed ethanol, which is interesting as his employer, Vinod Khosla, has been an ethanol advocate for a long time. Doug went on to walk us through the high-level categories of their renewables portfolio:

• Oil: Corn/Sugar Fuels, Cellulosic, Future Fuels
• Coal: Solar, Wind, Geothermal, Natural Gas
• Efficiency: Electrical, Mechanical
• Materials: Tools, Water, Plastics, Building Materials